Resolution Rules: When “Ordinary” Isn’t Enough. What Every Lot Owner in Victoria Needs to Know
Decisions in a Victorian owners corporation (OC) are not all created equal.
Some matters, like approving the annual budget, can usually be decided by a simple majority. Others, like changing the rules, borrowing significant sums or raising large special levies, require a much higher level of agreement from lot owners.
The Owners Corporations Act 2006 (Vic) (the Act) sets out three main types of resolutions: ordinary, special and unanimous. Each has different voting thresholds and is used for different types of decisions. Getting the type of resolution wrong can put the validity of levies and decisions at risk.
This article explains, in plain language, what each type of resolution means and why it matters for every lot owner.
What is a Resolution?
A resolution is a formal decision of the owners corporation, made either:
- at a general meeting (including an annual general meeting); or
- by ballot conducted outside a meeting.
The committee can also make decisions, but it does so under powers delegated by the OC. The thresholds below (ordinary, special, unanimous) come from the Act and apply to decisions of the OC itself; many of those powers can then be delegated to the committee for day-to-day management.
Most decisions of an OC are made by ordinary resolution. Only certain, more significant matters need a special resolution or unanimous resolution.
The Types of Resolutions
The Ordinary Resolution: For Routine Decision
An ordinary resolution is the default type of resolution.
It is passed if a simple majority of votes cast at the meeting (or returned in a ballot) are in favour.
By default, each lot has one vote, whether the vote is taken at a meeting or by ballot.
For ordinary resolutions, any matter that does not specifically require a special or unanimous resolution under the Act is decided this way.
Special Resolutions – When the Stakes are Higher
A special resolution requires a much higher level of support:
It is passed if 75% of votes are in favour:
- 75% of total lot entitlements if a ballot or poll is taken; or
- 75% of total votes for all lots in any other case.
Interim special resolutions (ISR)
Sometimes a special resolution doesn’t quite reach the 75% threshold. In that case, it may still pass as an interim special resolution if:
- at least 50% of total votes (or lot entitlements) are in favour; and
- no more than 25% are against.
If an ISR is passed:
- The OC must send notice of the interim special resolution to all lot owners within 14 days of the meeting or close of ballot;
- The notice must state that the ISR will become a full special resolution after 29 days, unless lot owners holding more than 25% of the total votes petition the secretary against it within that 29-day period.
If there is no qualifying petition, the ISR automatically becomes a special resolution at the end of the 29 days.
Unanimous Resolutions – for Fundamental Changes
A unanimous resolution is the highest level of agreement:
It requires 100% support, either:
- all lot entitlements if a ballot or poll is taken; or
- all votes for all lots in any other case.
Unanimous resolutions are reserved for decisions that fundamentally change property rights or the structure of the OC.
Why the Right Type of Resolution Matters
Using the wrong type of resolution, for example, approving a major special levy by ordinary resolution when the Act requires a special resolution, can have serious consequences.
If a resolution is not passed in accordance with the Act:
- it can be challenged by lot owners, including at VCAT;
- levies or decisions may be declared invalid or set aside;
- the OC can face significant administrative and financial burden, including refunding levies and re-issuing compliant resolutions and fee notices.
For lot owners, understanding resolution types is essential to:
- identify when a proposal is being put forward with the correct threshold; and
- know when you may have grounds to question or challenge a decision.
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© Bugden Allen Group Legal Pty Ltd. This is general information only and not legal advice. You should not rely on this information without seeking legal advice tailored to your specific circumstances.
This post appears in Strata News #786.
Julia Moroz
Bugden Allen
E: julia@bagl.com.au
P: 03 8582 8100
Molly McCarthy
Bugden Allen
E: info@bagl.com.au
P: 02 9199 1055
This article has been republished with permission from the author and first appeared on the Bugden Allen website.
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